The Import Of It All

BOSTON
— This is where things start to seem complicated, and maybe even a little weird.

You might have thought that all the hand-wringing over the Oct. 27, stock-market misstep would be done, since by early last week, the Dow Jones Industrial Average had retrieved most of its lost ground. If you had gone on vacation Friday, Oct. 24, then returned Thursday, Nov. 6, not much changed.

But looks can deceive. As much as we'd like to consider the crises in Asian markets quarantined, they may reach beyond. Plus we've got some quirks here at home to throw into the mix.

First, let your gaze drift to the right. Correspondent Jim Tyson tells the story of blue-collar workers starting to ride on this juggernaut economy.

Men like Walt Benewicz bring home upwards of $50,000 a year. They know more, produce more, and are more in demand than at anytime in the last decade.

It's the kind of story that probably gives Alan Greenspan the jitters.

Mr. Greenspan doubtless does not begrudge Mr. Benewicz a decent wage. But we'll get to that later.

First ... Asia.

Think about the problems in Asia this way. A lot of you probably have some sort of basket in your homes. I know the McCormick household has a devotion to woven twigs not unlike the one Bill Clinton once felt toward campaign contributions. Very cozy. And, as with the president, the objects of our devotion often started their journeys in such places as Indonesia, China, and Thailand.

The danger now is that instead of just importing Asian baskets, the US may start to import Asian basket cases.

The experts describe it as "importing Asia's deflation."

The idea is that the value of Asian goods has dropped drastically. Currencies in many Southeast Asian countries have been devalued by at least third, which means that where a shirt, or basket, made in Thailand last year cost $15, it will now cost about $10. Good news for you. Bad news for the Thai workers.

And bad news for American companies that make products that compete with imports. They may have to cut prices to compete. That could cut their profits - and their stock prices.

Most of the Asian economies look fundamentally sound. But at best, they have problems that need years to settle. At worst, they are looking at deflation - where prices fall because people have less money to buy things.

Along the way, that Thai shirtmaker will now spend less, perhaps cutting a General Electric refrigerator out of the budget. Some 30 percent of US exports go to Asia, and they will be hurt.

Fewer American exports means lower profits for many American companies. Some economists think the impact could end the New Economy's growth.

That's the concern about Asia.

The concern about Greenspan and Benewicz follows a different trail. Greenspan chairs the Federal Reserve, which controls short-term interest rates, and he reportedly considers rising wages the harbinger of higher inflation - and a call to raise rates.

Statistically, Friday's unemployment report gives it some bite. The jobless rate fell to a 24-year low, 4.7 percent, and hourly wages rose briskly. A lot of economists think that would have earned a rate hike when the Fed meets Wednesday, but they say the stock market is so jittery it won't happen until next year.

So here's the picture: The fallout from Asia is unknown; the economy might be slowing; and Greenspan may have a rate itch he's eager to scratch.

What all this adds up to is ...

Well, no one really knows. And that's why the Dow jerks back and forth in 100-point swings, as it did Friday, and why it could just as well head for 7000 as 8000.